November 26, 2015

Oscar Farinetti talks Eataly's start in Munich

Eataly founder Oscar Farinetti (photo: Eataly; Michele D'Ottavio/Pho-to.it)
Oscar Farinetti: "We've come at exactly the right time to Germany"
The opening of Eataly's first German outlet in Munich this Thursday was a logical step for a fine food & gastronomy chain that deliberately appeals to the emotions and plays on its Italianness. After all, the Germans call Munich "Italy's most northern city".

The new project in the Bavarian capital is the Turin-based company's 27th outlet worldwide. The concept sells authentic artisanal food in market halls and combines this offer with restaurants, food lecture rooms, and exhibition areas.

The 4,600m² site at the Schrannenhalle (old corn exchange) in the heart of Munich is perfectly chosen as it lies adjacent to the historic Viktualienmarkt (farmers' market). But it took Eataly founder Oscar Farinetti two years to overcome German bureaucracy after signing contracts.

So the man, who strives for a Renaissance in our eating habits against the utilitarian Zeitgeist of mass consumer markets, now confronts grim local retailers on their home turf with his first shrine to good food. Will they take up the gauntlet? Do they even understand the challenge?

Eataly, Schrannenhalle, Munich (photo: Hans-Rudolf Schulz)
Eataly in the Schrannenhalle: The dolce vita comes to Munich
Farinetti was unusually reserved up until opening day. Presumably, this had something to do with Eataly's recent partnership with Signa Retail, the new owner of German department store chain Karstadt. The joint-venture aims at five or more new Eataly outlets in major Karstadt branches across Germany, Austria and the German-speaking part of Switzerland by 2021.

Some call the avuncular Farinetti a food philosopher and visionary, others a brilliant salesman. He is certainly a charismatic guest on Italian talk shows and a successful businessman. The chain he created in 2004 now boasts 27 food temples worldwide, 5,000 employees, and annual revenues of €400m.

This 61-year-old slow food advocate is anything but slow when it comes to his ambitious plans for international expansion. These have gone into overdrive since former Luxottica CEO Andrea Guerra (50) joined the team last month.

The duo, who are close confidantes of reform-minded Italian premier Matteo Renzi, want to extend Eataly's culinary empire to 100 sites by 2018. They are also looking to enter South America, China and India.

The next outlets will open in Moscow and at the new One World Trade Center in Manhattan. Stores are also planned for Boston, Los Angeles, Toronto, the United Arab Emirates, Paris and London.

Last but not least, this is the type of growth story investors love to hear when they think the magic three-letter word IPO...

"More than pizzas and mandolins"


Eataly founder Oscar Farinetti (photo: GDI)
Signor Farinetti, why do you believe that Eataly will be successful in Germany?

I think that we are offering our German customers exactly the right food concept at exactly the right time. They want to know more about the exciting range of regional Italian cooking because our cuisine has become a symbol of good food and enjoyment. We are bringing to Germany the best products that Italy has to offer. Our concept also meets a growing demand for high-quality food and to know more about food.

But Germans are not as demanding as Italians when it comes to high-quality food. They see food primarily as a way to save money. Aren't you exporting your concept to the wrong market?

Absolutely not, on the contrary, this is mere prejudice. Everyone likes to eat and drink well, and people enjoy their food even more when they know what they are eating.

One doesn't exactly see a German restaurant on every street corner in Italy...

German cuisine isn't sophisticated and complex, but it is honest and wholesome. It uses only a few ingredients, but these are very high-quality. Potatoes, meat, sauerkraut, soup – every region has its own specialities. Germany also has a most distinctive beer culture, which goes back to the Middle Ages and which boast more than 5,000 different types.

Many Germans currently feel the pinch as wages stagnate. They also complain about stress and having less and less free time. Why should they pay relatively high prices at a slow food concept?

Let me explain this to you this way. We spend only around 20 per cent of our available income on food. But what we eat is nutrition for our body. One should look after oneself by eating well instead of trying to save at the expense of one's health. That's why our motto is: "Eat better, live better."

But people also need money to live. That's why many shop at discounters...

Eataly offers the best Italian foods and wines at sustainable prices. Plain pasta costs only around 10 cents a kilo less than highly nutritious alternatives. We also ought to eat fewer products, but better ones. This would have the added advantage of reducing unnecessary rubbish. These are the kind of values for which Eataly stands and ones which we want to share with our German customers.  

To what extent do you believe that you will have to teach local consumers to be more open to your kind of product?

We see it as our mission to tell the world about the best Italian foods and wines as well as how they are made. We also want our cooks to teach our guests how best to use ingredients. We are therefore heavily focussed towards communication, and teaching is a very important part of our concept. In this context, we will also be starting workshops and store tours for children as from January.

Eataly, Schrannenhalle, Munich (photo: Hans-Rudolf Schulz)
In your Italian stores it is not unknown for managers to sit with cleaning personnel at the same table – united in their love of good food. Do you believe that this could ever work in such a status-driven country as Germany?

Why not? After all, food unites, irrespective of place. When we open our second outlet in New York next spring, we intend to introduce a "Peace Table". I would like influential and powerful people to sit down together over some good food and wine and then for them to forget their arguments and differences of opinion. Instead, they should chink glasses and give a toast to peace. Wouldn't that be a wonderful thing?

Your concept might work in big metropolises such as Berlin, but it is hard to imagine Eataly succeeding in the German provinces. Would you agree, or haven't we understood your concept properly?

At the moment, we are indeed concentrating on big cities as they have both locals and tourists. However, we plan to expand our concept to as many places as possible.

Why are you starting in Munich rather than in Berlin?

Because Munich is in Bavaria and the Bavarians are similar to us Piedmontese in that they are traditionally-minded and love good food. Also, 21,000 Italians live in Munich who have a deep understanding of the importance of Italian biodiversity and for whom Italy is more than just pizzas and mandolins.

How much have you invested in Munich, and why did you decide on the Schrannenhalle?

A few million euros. The Schrannenhalle is in the heart of Munich on a site which has long been linked with retailing. It is also a wonderful building. Although the site is enclosed, its glass facades give it a very open feeling and make it clearly visible from outside.

Eataly's branches are usually quite big. Schrannenhalle is only 4,600m². Did you have to make compromises and reduce your offer?
Not at all, even our largest and most important store in New York is only 7,000m². We also have outlets which are smaller than in Munich.

Eataly, Schrannenhalle, Munich (photo: Hans-Rudolf Schulz)
How many food lines are on offer in the Schrannenhalle?

Around 10,000, one in ten of which will come from Germany. We are lucky in that Munich is relatively near to our main distribution centre in Turin and because duty and taxes are low within Europe. We will also offer some excellent Bavarian products and use, for instance, vegetables from the region when we cook.

How much higher are your prices compared with those of a German hypermarket?

Our prices aren't higher. We are also offering various different price ranges in all of our product categories.

What annual sales are you planning to make in Munich for 2016?

Our break-even point is around €20m, but of course we would like to do more than that.

Most gastronomical offers in big German self-service stores have failed. What do you think was their main mistake?

To sell products, rather than values. What we eat every day has a direct relationship with how we feel. People are becoming more and more aware of this in many countries, including Germany, which is why we have arrived at exactly the right time.

You have often been called a slow food supporter. Is that really how you see yourself?

Most definitely, we can't afford to ignore the incredible variety we have on this planet. Big business can't destroy regional culture in the name of globalisation and destroy our traditions. That will only ruin our society and rob people of their identity. But, far more importantly, economic growth is not the way to bring the few rich people and the many poor people in this world together. Slow food philosopher Carlo Petrini tries to get this message over every day.

Eataly founder Oscar Farinetti (photo: LZ-Bildarchiv; Laif 18t)
Isn't this a bit rich, coming from a successful and wealthy businessman?
Of course I am a businessman, but I also consider myself a trader of the old-school. Traders have always travelled the world and brought back local products from other regions they have encountered on their journeys. This has enabled people to discover the huge variety in the world without necessarily having to travel themselves. I am in the lucky position where I can really concentrate on this task.

Would you call you and your ilk a type of fifth column within the capitalist system?

I don't like this type of provocation. We are not working in a fifth column because this presupposes that there is an "enemy". Our goal is merely to improve the systems behind the production of food and to raise standards while preserving local traditions and biodiversity. We achieve this by passing on our knowledge and by making people more aware of the subject.

So how would you define your standards?

We are principally concerned with small producers, high-quality foods and niche products. We always work to improve the eating habits of our guests and customers by promoting an awareness of what good food really is. In today's society, the high-tech industry gets most of everyone's attention, so we must work hard every day in order to promulgate our motto "Eat better, live better".

At the beginning of this month, Eataly also signed a joint-venture with Signa Retail. Your own locations in, for example, Turin are very striking architecturally. Do you really think that Karstadt department stores can offer you anything like the same ambience?

That's a very one-sided view. I have seen all types of buildings in the Karstadt stable. These range from luxury department stores, such as KaDeWe in Berlin or Oberpollinger in Munich, to historical department store buildings in Bremen, Hamburg, Karlsruhe or Erfurt, to name just a few. They also have some impressive modern buildings such as on the Schlossstraße in Berlin or in Dresden. So there are any number of possibilities – both as stand-alones or within existing department stores.

Eataly founder Oscar Farinetti  (photo: Canio Romaniello)
You are the founder of Eataly. Do you still own the company today?

I decided to transfer the business to my sons a few years ago so that I could devote myself to the world of wine. So the future development of Eataly is their task. They have a majority stake in the company and run it together with CEO Luca Baffigo, who owns the remaining shares. Since last month we also have Andrea Guerra, whom I regard as one of the best managers in Italy, as Executive President.


Related article in German: Interview by Mike Dawson in Lebensmittel Zeitung, no. 48, 27.11.2015




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